Shares of Impac Mortgage Holdings Inc. were down sharply Friday after the Newport Beach-based real estate investment trust reduced its fourth-quarter dividend, the result of continued pressure on earnings.
Impac’s shares were off about 8%. The company counts a market value of about $700 million, which is down by about half since July.
The company’s directors approved a fourth-quarter dividend of 20 cents a share late Thursday. That’s down from 45 cents a share for the prior quarter and 75 cents a year ago.
REITs are required to pass through most of their profits to stockholders as dividends.
Impac officials blamed rising short-term interest rates and increased levels of mortgage prepayments for a drop in the company’s recent net interest margins,a familiar refrain for many mortgage companies in Orange County.
“Although loan production remained solid during the fourth quarter, profitability at our mortgage operations declined significantly as price competition and the widening of bond spreads affected our profitability on the sale of mortgage loans,” said Joseph Tomkinson, Impac’s chief executive.
The company is set to pay its fourth quarter dividend on Jan. 24 to investors as of Jan. 17 or earlier.